Marriott to Acquire Starwood Hotels & Resorts, Become World’s Largest Hotel

Starwood Hotels and Resorts is being purchased by Marriott International for a whopping $12.2 billion in cash and stock.

The combined company will have over 5,500 hotels with 1.1 million rooms worldwide. Frits van Paasschen the long time CEO resigned earlier in 2015. Its set of brands, including W, Westin and Sheraton, are well-known yet relatively limited when compared with competitors’ portfolios. Those individual hotel owners are responsible for setting nightly room rates. Marriott International reported revenues of almost US$14 billion in fiscal year 2014. Frequent business travelers will also be closely watching the deal.

The Marriott Rewards program has 54 million members while Starwood Preferred Guest has 21 million. They are often located near highways and airports or in suburban office parks.

Starwood had been reaching out to other companies in the industry, including Wyndham Worldwide Corp (NYSE:WYN) and InterContinental Hotels Group Plc (LON:IHG), since July in hopes of making a deal. But in the end, it was Marriott who prevailed.

The acquisition will further Marriott’s goal of boosting its presence in key emerging markets China and India, where Starwood is well represented, as well as in Europe, executives said.

It was in April this year that Starwood had indicated that it was considering strategic options. The company operates and franchises hotels and resorts under 19 brands, including the Ritz-Carlton, Bvlgari, JW Marriott, Renaissance Hotels, Marriott Hotels, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites and TownePlace Suites. The company’s strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, impressive record of earnings per share growth and increase in net income. Guests have been paying an average of $120.35 a night; the previous record, adjusted for inflation, was $119.70 in 2008. The prior record, adjusted for inflation, was $119.70 in 2008.

Bethesda, Md.-based Marriott International owns more than 4,300 properties in 85 countries. The merger of the two will create the largest hotel company on the planet.

Marriott Chief Executive Arne Sorenson said that the deal would make them “the world’s favourite travel company”.

The multi-billion dollar transaction is expected to close in mid-2016.

Marriott said the total one-time cost of the transaction will range between 100 million and 150 million United States dollars (£66 million and £99 million).

The announcement comes more than two weeks after Starwood spun off its time share business, Vistana Signature Experiences, and merged it with a subsidiary of Interval Leisure Group.